As introduced, I am Shigeru Hayakawa from Toyota Motor Corporation. Thank you very much for inviting me to today’s national convention commemorating 75 years of Japan’s offender rehabilitation system.

The original invitation was extended to our Chairman, Akio Toyoda, and he was eager to assist the hogoshi by coming to speak in person. Unfortunately, his schedule did not allow him to be here today.

Please accept my apologies. In his place, today, I would like to speak about the ideas and actions with which Akio Toyoda transformed Toyota Motors after becoming president in 2009.

When we received this request, the presentation was to be titled “Toyota’s Challenge.” Personally, however, I would not describe the 15 years of reform that began with Akio Toyoda’s presidency as a challenge undertaken by the Toyota Motor Corporation.

Rather, this is the story of one man, Akio Toyoda, running up against the vast organization of Toyota. Laying bare his emotions and humanity, he broke down an organizational logic that was out of touch with the real world.

Amid this fight, people who had been immersed in the organization gradually opened their minds, awakening to what they truly wanted and needed to achieve.

I believe that getting people to engage with each other in this way was at the very heart of Akio Toyoda’s reform.

That’s why I decided to title today’s speech “Akio Toyoda’s challenge: The fight to restore the essence of Toyota.”

First, let me briefly outline my own background.

After joining Toyota in 1977, I worked primarily in external relations and PR, based in North America.

But setting aside my roles at the company, the reason I am speaking to you today is because I was one of the people working alongside Akio Toyoda, witnessing the fight he took up throughout his presidency.

Today, I would like to share what I have personally seen and felt, not as Vice Chairman of Toyota Motor Corporation, but as one of the people who was there on the ground.

Toyota Motor Corporation was founded 87 years ago, in 1937.

The company’s founder was Kiichiro Toyoda, the grandfather of Chairman Akio Toyoda.

Kiichiro believed that “It is not just about making automobiles. With Japanese ideas and skills, we must create an automobile industry for Japan.” Together with his colleagues, he set out to do just that.

With neither the technologies nor the money, at the time, Japan was seen as incapable of producing automobiles.

Nevertheless, Kiichiro and his peers felt that someone had to do it, and, determined to be that someone, they faced up to the challenge. It was a fight that would shape Japan’s future.

In 1950, however, with the company just over a decade old, the postwar recession brought Toyota Motor to the brink of bankruptcy. At the same time, a labor dispute pitted the company against the unions.

To put the company back on its feet, Kiichiro made a heartbreaking decision to lay off 1,600 employees, whom he considered like family. He took responsibility for the outcome by resigning as president.

Just two years later, Kiichiro tragically passed away without fulfilling his life’s ambition.

The vision of creating an auto industry in Japan was carried forth by Eiji and Shoichiro Toyoda, along with others who had toiled with Kiichiro in the company’s earliest days. Together, they grew Toyota into one of Japan’s leading companies.

Led by overseas markets, Toyota steadily increased its sales, eventually overtaking America’s General Motors to become the world's largest automaker by volume.

Then, in September 2008, the collapse of Lehman Brothers, an American investment bank, triggered a global financial crisis and recession.

Almost overnight, Toyota lost profits of more than 2 trillion yen, falling into the red for the first time in company history.

At that time, scale was generally seen as the most important factor for triumphing in global competition.

Within this climate, Toyota Motor had set its sights on becoming the world’s largest automobile company, focused on making “more” rather than “better” cars.

As such, the company did away with models that weren’t selling in large numbers or making money, namely sports cars and commercial vehicles. The product lineup became skewed toward the cars that Toyota wanted to make.

I believe this stemmed from a manufacturer’s ego and arrogance, believing we could sell whatever we made. A disregard for customers and management driven by numerical targets had steadily undermined Toyota’s corporate character.

Having remained profitable through every adversity until that point, during the global financial crisis, the company recorded its first-ever loss.

The auto industry has a very broad reach, spanning from materials and parts to sales, distribution, used vehicles, and finance. It is also a global industry, with companies operating around the world.

Toyota’s fall into the red caused tremendous trouble for the many countries and industries connected to its business.

I believe the Toyota of that period had forgotten its founding purpose, to “create an automobile industry for Japan,” and had lost sight of its duty as a carmaker.

It was in these circumstances that Akio Toyoda, a descendant of the company’s founders, took up the presidency.

Even before becoming president, Akio Toyoda had long been deeply alarmed at the state of Toyota.

Foremost, to reestablish the company, he needed to revamp its products, the vehicles. As someone with no technical background, in order to transform Toyota’s products, he first had to learn the language of its engineers in the form of driving skills.

With this mindset, Akio Toyoda embarked on intensive driver training under the tutelage of legendary test driver Hiromu Naruse.

As soon as he assumed the role of president, Akio Toyoda laid out his management vision, consisting of these simple words: Let’s make ever-better cars.

He never mentioned numerical targets such as sales volumes or revenues.

From both inside and outside the company, this earned him nothing but criticism.

“Why can’t this president set numerical targets?”

“We need more concrete specs to do our jobs.”

“He’s just racing for his own amusement.”

Looking back on those days, Chairman Akio says, “I was the president no one wanted.”

Then, in the wake of the global financial crisis, Toyota faced an even greater threat to the company’s survival.

In the summer of 2009, an accident involving a Lexus in the United States highlighted quality issues that led to the recall of more than 10 million vehicles worldwide.

With trust in Toyota crumbling, President Toyoda traveled to public hearings in the U.S. to serve as the company’s rearguard.

Please watch this video.